The President at the EU Parlement for EURONEST Energy Security Committee meeting

September 23, 2012October 14, 2012

The day was divided into four panels as follows below. The remarks given below are based on notes taken during the round-tables, that seem of primary importance.

I. Current landscape of the EU-Eastern European Partners’ cooperation in the energy field and potnential for future development. Energy consumption is the heart of an economy. 80% of all energy consumption is related to urban activity, which is the highest in CO² emissions. This is where WASTE can be reduced by improving energy efficiency, which could create 2M jobs across the EU.

Kevin McCann of INOGATE stated that to secure clean and affordable energy is of prime importance; he stressed the importance of having reliable ENERGY STATISTICS are important to measure progress and the importance of creating a favorable investment climate. The BAKU INITIATIVE and the ASTANA ROADMAP will have a positive impact by : 1) creating jobs; 2) reducing CO² in real metrics; 3) lower tariffs; 4) increase cross border trade.

In the Q & A period he came back to express the wide diversity in the way data is collected : some done by NGO’s; that the World Bank doesn’t have their own data and uses independant data collectors in target countries. How can energy needs by predicted in 5/10 years if reliable statistics are not available?

Murman Margvelashvili, Director Energy Studies from Georgia reminded the audience that Europe is 60% dependant on its oil supply and 40% on its gas. He exposed that natural gas has 50% less CO² emissions than traditional fossil fuels, which would contribute to mitigating climate change. He spoke of “political pricing” by Russia, which was threatening the development of the EP countries, as Belarus had lower prices outside the Eastern European Partnership countries and that Moldova was incited to leave the EE structure to pay its energy less. And that the Southern Corridor pipeline could supply 45-90bcm, which could partially fulfill some of the EU’s energy demands (360bcm). Energy security and stability is necessary to achieve independant development. There is a need for EU legislation in technologies, which demand a higher requirement by the technicians to upgrade their knowledge in software.

Georgia has a high dependancy rate of 60% for fossil fuels and 70% of that comes from transit agreements, which makes it very interestd in transit markets. But the quality of legislation is absent and the occuption of Russia requires a specific approach.

He suggested to develop CIVIL SOCIETY and provide SECURITY INDEXING for all EP countries, which would result in TRANSPARENCY on the process and HARMONISATION as well as SUSTAINABILITY in the economy, in society, in the environment.

In the Q & A period he came back to state that Georgia is green and that hydropower covers 85/90% of the country’s electricity needs; the other 10% comes from fuel. Hydropower is an area of potential growth in Turkey and an avenue to export green energy to Europe.

It was discussed that the Chinese have been so successful in Turkmenistan and how they finished their pipeline in 6 years. The EU doesn’t have a strong unified, common policy.

“Optimisim is the opium of the human race.”

II. Developing an integrated and interconnected energy market. Slavtcho Neykov opened the second panel with the social dimensions of Energy : HEATING or EATING. Is regional cooperation possible and at what level? Guidelines came out in 1968, but it has taken 40 years to get to a legal term/definition. The Lisbon Treaty (1986) outlined 4 major issues and let the EU member states on energy dependance, security of suppy and demand and technical security. National energy strategies today still include nuclear energy and coal; the environment requirements are not being met.

Security of energy supply has been added to the ACQUIS COMMUNAUTAIRES and that social partners, NGO’s, trade unions should have a say and business should support these initiatives. A Common Regulatory Energy Strategy is to be adopted in October 2012.

Mykhailo GONCHAR, President of Global Studies in Kyiv, Ukraine expressed concern that the Ukrainian system was not integrated into the EU network; however, Burstyn Island is synchronized with the EU energy grid. Ukraine wants access to free marekts and wants to meet EU requirements for transmission. The export potential the EU would increase the security of EU energy supply, transparency and innovation. Even if there are green projects in the Crimea, such as in wind parks, solar stations, Mr Gonchar said that there were limited prospects in renewables, even the interest is strong to increase 12% of actual energy mix in renewables to 20% by 2030.

There is no common EU vision of energy security. Russia tends to undermine EU energy security. EU needs to : 1) clarify peaceful status quo; 2) launch a mission before conflict appears; 3) to prevent deals that are not based on EU priorities. Russia is ready to block Trans-Caspian pipeline with military means. There needs to be reversible opportunities. There needs to an exchange of physical data of gas flows through the Energy Transparency Regime.

He led a discussion on Methane Hydrates (MH) and the potential of energy available from 220 fields. There are reserves for 400 years; 89% MH is located in permafrost, which is non-stable, dangerous threat on the environment.

There is 60 years of gas supply with CURRENT TECHNOLOGY; there are 250 years adding in gas hydrons. There is a race for the fight of RESOURCES and the other is TECHNOLOGY; the EU should invest in this or else it will be depedant on others for RESOURCES.

In the Q & A period, a question was asked if Nuclear energy was moral? How does it affect people’s health? The response was that much of the nuclear installations used Soviet technology, such as in Chernobyl.

Who pays the price for renewables? The consumer. Privileged access at privileged prices. Russia increases prices to decrease Ukrainian competitiveness. Iulia Tymoshenko wanted to sign a memorandum to agree on prices to line up with EU and Russia did not like it. How can political leaders be protected when making courageous decisions? ENERGY IS A POLITICAL ISSUE.

III. Supporting infrastructure development and diversifying routes for energy supplies.

Krishanis KARINS, MEP, Latvia : where there is competition, there is better service and lower prices. 60% of gas in EU is imported. There is no SOLAR power in Germany. GAZPROM won’t cooperate with the Commission as Putin passed a law. Monopolies don’t want to give up their positions; but if you want to work with Europe, you have to play by the rules. Good for the Azeris to have TWO points of sale rather than just one. And Fuad MUVADOR, AZ Deputy said that his country wants to develop the region and is looking for cooperation with the South Caucasus.

Q & A session : EU electricity demand will double. How do you power the digital world?Could it play a real role in resolving tariff problems with Iran? As concerns infrastructures, politicians have to be able to provide for a more secure framework for development and for the security of investments made.

IV. Improving energy efficiency and developing new sources of energy, including renewable energies

Michèle Rivasi, MEP, France, put the light on insulating buildings, therefore cutting back fossil fuel demand, and creating jobs that can not be outsourced to foreign countries. She also underlined the importance of decentralized models; she discouraged the exploitation of shale gas, because of company failures, high investment necessary, damage to the enviroment and the high demand for water in this process.

Kristina Dely, Convenant of Mayors, which was launched in 2008, can not achieve its objectives without local/regional governments’ participation. The Council reports to the EU and has engaged €40B in investment and has created >80K jobs per year and mitigated 160M tons of CO². There are 48 signatories in EP countries : 5 in Ukraine and 1 in Georgia.

Vladimirr PEREGUDOV, 1st Deputy head of Dnipropetrovsk Regional Council, said that energy efficiency works at the NATIONAL level but not at the local level. The region produces 90% of the country’s energy resources. They are looking at renewables, green tariffs and have undertaken 4 projects with EU partners. They are trying to maximize ENERGY SELF-SUFFIENCY. Permits have been issued to 8 sites for shale gas (reserves estimated to be 7Bm3).

Ruslan SURUGIEN, Moldova was not very optimistic about for his country’s renewal programs, as they stand at 5% of the energy mix. He asked if 20% renewables by 2020 was possible? Coal stations should be replaced by gas stations. He said that Moldova had a very high bill to Gazprom for energy amounting to $4.2B a year.

V. The way forward : prospects of the energy cooperation under the Eastern Partnership

Valeh Alasgarov, Deputy Speaker of Azerbaijan Parliament, said that prices were driven by markets and political tensions, not demand : consumption from 2001-2010 grew by only 1,2%; prices leaped by 70%! So consumption does not explainn the rise of the price of the baril of oil. The availibility of oil is now at 46,2 years and the refining capacity has remained stable at 81%.

Edit Herczog, MEP, Rapporteur, EP-Committee on Industry, Research and Energy, asked the question : what are the common challenges? Energy demand will double by 2015 and the nature of energy has changed. Consumers must have a right to energy. Literacy will be internet-based; energy is necessary. How can we provide energy with rising prices? Is the project do-able? Is Nabucco do-able? Which model do we follow? Is there a lack of will? What’s missing? Is it a 1 : 1 conversation or a 27 : 1 conversation? We need to clarify who we are regarding all energy sources. Three recommendations came out of the Energy Report : 1) we have to be totally open to all (US, South America, North Pole); 2) we have to be able to rely on ressource dependancy; 3) we have to share information on energy policies amongst the 27 EU countries. EU energy does not make a common policy but a commuity policy of 27. We need to find new checks and balances. We need to connect the pipelines through a EU agency, not through policies or by Foreign or Economic Ministries.

Paula PINHO, Member of the Cabinet of the EU Energy Commissioner : Security of supply and demand : the imports of the EU are 80% dependant on oil and 60% dependant on gas. We need to diversify the routes and sources of energy, achieving « independency within dependancy » . The South Corridor would do both and Azerbaijan wants to be the enabler. Is there political will in the EU? Of the 27 nations? We have to find a common denominator. The 2009 crisis has served as a wake-up call that alone, one country can not make it alone. But which model should we follow? Should a country wish to suspend its membership to get a better deal? Each country of the Eastern Partnership has a different rôle to play. Should it be more bilateral or multilateral?

Jacek Saryusz-Wolski, MEP, Rapporteur, EP-Committee on Foreign Affairs: The 2006 Energy Security policy put on the agenda the prospects of good partners more ready to discuss with the EU, than vice-versa. There is more of a decifit of political will, who are impotent in energy deals.

Referring to Edit Herczog’s comparison of the EU to the multiple ingredients to make goulasch soup, Mr Wolski referred to the EU as salami, that should be cut up into small pieces : 6 + 27. Why is the South Corridor delayed? How can we quickly get funds to move forward? We need a legal framework, an Energy Charter and Treaty. Moldova and Ukraine are being blackmailed by Russia. Partnership should be based on the ‘acquis communautaires’. We need to increase energy security, include new dimensions, price-setting mechanisms. The EU wants friends to get along amonst themselves and create more self-suffiency.

Closing remarks were made by Elmer BROK, Chairman of the AFET Committee of the European Parliament : our energy partners are beyond our borders. There is strategy on one side and egoism of the member states on the other. Energy is the case of private compânies. Commissioner Öttinger has set up a framework and the external dimension of the external states has led to strengthening the power of external states. The energy security clause for a code of conduct should regulate the terms of supply and strengthen supply relations. There will be a vote on November 6th.